ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of August 26, 2017 No. 511

About approval of the National Export Strategy Program

The government of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed National Export Strategy Program (further - the Program).

2. Ceased to be valid according to the Order of the Government of the Republic of Kazakhstan of 03.06.2019 No. 361

3. To the central and local executive bodies and other organizations to take measures for program implementation.

4. Provide to responsible central and local executive bodies information according to the Actions plan on program implementation according to the Rules of development, realization, carrying out monitoring, assessment and control of the Strategic plan of development of the Republic of Kazakhstan, the state and government programs, strategic plans of state bodies, development programs of the territories, and also developments, realization and control of the Forecast scheme of territorial and space development of the country approved by the Presidential decree of the Republic of Kazakhstan of March 4, 2010 No. 931 "About some questions of further functioning of System of state planning in the Republic of Kazakhstan".

5. To impose control of execution of this resolution on the Ministry for Investments and Development of the Republic of Kazakhstan.

6. This resolution becomes effective from the date of its signing.

Approved by the Order of the Government of the Republic of Kazakhstan of August 26, 2017 No. 511

"National Export Strategy of the Republic of Kazakhstan" program

Table of contents

1. Passport

2. Introduction

3. Analysis of the current situation

3.1 The current tendencies in development of export of Kazakhstan

3.1.1 Commodity export

3.1.2 Export of services

3.1.3 Participation in international trade agreements

3.2 The global trends influencing world trade

3.3 Policy of state regulation and results of implementation of the previous programs

3.3.1 Normative legal regulation of activities of exporters

3.3.2 Assessment of results of state policy on promotion of export

3.4 Competitive advantages, challenges and barriers to the Kazakhstan export

3.5 Opportunities for the Kazakhstan commodity export and services

3.5.1 Perspective "export basket" of Kazakhstan

3.5.2 Priority markets of Kazakhstan

3.6 Foreign experience

4. Purposes, target indicators, tasks and indicators of results of program implementation

5. Main directions, ways of goal achievement and tasks of the Program, adequate measures

5.1 Strengthening of institutional bases of support of exporters

5.2 Rendering financial and non-financial measures of support for exporters

5.3 Elimination of the barriers interfering export development

5.4 Improvement of conditions of development of export of services

6. Necessary resources

1. Passport

Name	"National Export Strategy of the Republic of Kazakhstan" program
Basis for development	The president's letter of the Republic of Kazakhstan of January 30, 2017 "The third upgrade of Kazakhstan: global competitiveness"; Strategy "Kazakhstan – 2050": new political policy of the taken place state; The concept on entry into number of 30 most developed states of the world approved by the Presidential decree of the Republic of Kazakhstan of January 17, 2014 No. 732.
State body responsible for development and program implementation	The ministry of national economy of the Republic of Kazakhstan – development of the Program, the Ministry for Investments and Development of the Republic of Kazakhstan, other central and local executive bodies – program implementation
Purpose	Creation of conditions for increase in amount of non-oil export to time 1,5 by 2022, and also diversifications of the markets and commodity export and services *
Target indicators	1) the Export volume of non-oil goods and services of the Republic of Kazakhstan will reach 31, 8 billion US dollars by 2022. 2) the Surplus of export of non-oil goods items with export volume more than 10 million US dollars to the countries of priority interest to % 8,0 in 2022 to previous year. 3) the Surplus of export of non-oil goods items with export volume more than 10 million US dollars to the countries of high interest to % 7,7 in 2022 to previous year.
Tasks	1) Strengthening of institutional bases of support of exporters. 2) Rendering financial and non-financial measures of support for exporters. 3) Elimination of the barriers interfering export development. 4) Improvement of conditions of development of export of services.
Realization terms	2018-2022
Sources and amounts of financing	Finance costs on program implementation are not required

* To the level of 2015

2. Introduction

For last five years the key program documents directed to upgrade of economy of Kazakhstan such as Strategy Kazakhstan-2050, the Plan of the nation - 100 specific steps on realization of 5 institutional reforms, the State program of infrastructure development "Nurla жол" for 2015 - 2019, the State program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019, the State program of development of agro-industrial complex of the Republic of Kazakhstan for 2017-2021 were accepted.

Updating of platform of long-term development of the country causes need of updating of approaches to the solution of strategic task of development and realization of the export potential of the country.

The head of state in the Message to the people of Kazakhstan of January 31, 2017 sets the task of continuation of industrialization with the emphasis on development of competitive export productions in priority industries of economy. At the same time, earlier within Strategy "Kazakhstan - 2050": the new political policy of the taken place state is noted need of development of new productions with the emphasis on expansion of the non-oil sector oriented to export.

At the moment there was new reality which designated completion of global "raw supercycle", change of rates and structure of growth of world economy, and also universal implementation of technological innovations. These technologies significantly change not only living conditions of the person, but also cost structure and logistics chains.

Nature of the international trade relations is at the same time transformed, in particular, strengthening of trend on protectionism and fight between the largest countries for building of regional trade areas is observed that the politician to new conditions requires system adjustment and adaptation medium-term national.

The "National Export Strategy of the Republic of Kazakhstan" program for 2018-2022 (further - the Program) is aimed at forming of single and complete policy on providing conditions for growth of non-oil export twice by 2025 and three times by 2040 according to Strategy Kazakhstan-2050.

The program determines perspective export basket and the priority markets, contains complex of specific measures for promotion of the Kazakhstan export and system of measurable target results for performance monitoring of its realization.

The program is aimed at forming of the necessary institutional structure increasing the speed and efficiency of the solution of both the operational, and long-term questions connected with activities of exporters.

Associate events which provide achievement of complex, synergy effect are performed through implementation of program documents, such as:

The state program of infrastructure development "Nurla жол" for 2015 - 2019 (provides support of the export potential of the country through creation of effective transport and logistic infrastructure, increase in competitiveness of subjects of the AIC, and safety of product quality through development of laboratory bases, provision of preexport and export crediting);

The state program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019 (provides support of investment projects in priority sectors of economy, one of selection criteria of which is export focus);

The program for development of service industry in the Republic of Kazakhstan till 2020 (provides complex measures for development of sectors of service industry, and also for institutional development of service industry in general);

The state program of development of agro-industrial complex of the Republic of Kazakhstan for 2017-2021 (provides development of the export potential of domestic production of the AIC);

The single program of support and business development "The road map of business of 2020" (provides consulting services to the export-oriented companies for procedures and processes for implementation of foreign economic activity);

The development program of regions till 2020 (provides measures for increase in the export potential of regions of RK).

It is expected that the program implementation will promote growth of non-oil export of the country, diversification of the markets and expansion of export basket. These measures are planned to be realized, including due to export of new goods items, increase in share of products with high value added, and also stimulation of investments into export-oriented productions and transfer of new technologies.

By results of program implementation are expected strengthening of line items of domestic manufacturers in the internal and external markets, reducing the transactional costs including connected with customs clearance and logistics. The program is aimed at increase in recognition of country brand and simplification of promotion of umbrella and corporate brands.

In general, the Program provides assistance to the purposes of acceleration of economic growth and diversification of structure of economy of Kazakhstan.

3. Analysis of the current situation

3.1 The current tendencies in development of export of Kazakhstan

Stable progress of Kazakhstan in the field of integration into world economy is followed by expansion of geography of its export. The Kazakhstan products are exported to 117 countries of the world. In 2015 Kazakhstan took the 50th place among 204 countries from shares of 0,28 of % of amount of world export, in 2016 - the 52nd place from % 0,23 shares respectively.

In geographical structure of export basket 6 countries (Italy, China, the Netherlands, Russia, France, Switzerland) to which about 63% of the total amount of commodity export were over the last 10 years exported prevail.

Export of the Kazakhstan goods and services reached peak in 2012, having constituted 91, 3 bln. dollars of the USA.

In view of dominance of oil and gas condensate in structure of the Kazakhstan export its cost differs in volatility and correlates with the prices of hydrocarbonic raw material.

So, in 2015 the cost of the Kazakhstan export dropped by 42% in comparison with 2014. Similar sharp fall of export was observed only in crisis 2009.

In 2016 export continued the fall and its amount fell lower than the level of 2007. System fall of the prices of goods items which occupy considerable share of export basket of Kazakhstan (oil, copper, ores) is basic reason.

Nevertheless, following the results of 2016 the share of commodity export and services in GDP of Kazakhstan constituted 32% that above similar indicators of the majority of the large developed and developing economies.

It reflects high degree of openness of the Kazakhstan economy and at the same time testifies to considerable sensitivity to the risks connected with structure of export. Insufficiently diversified export basket creates conditions for the considerable price shocks capable to negatively affect national economy.

Table 1 - Indicators of export of RK for 2007-2016

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Commodity export, bln. dollars of the USA	47,8	71,2	43,2	60,3	84,3	86,4	84,7	79,5	46,0	36,8
Export of services, bln. dollars of the USA	3,42	4,29	4,10	4,12	4,34	4,83	5,30	6,59	6,48	6,31
Primary goods, in % of the total amount of export	69%	72%	72%	70%	76%	75%	77%	77%	69%	65%
The processed goods, in % of the total amount of export	31%	28%	28%	30%	24%	25%	23%	23%	31%	35%
Trade balance on goods, bln. dollars of the USA	15,0	33,3	14,8	29,1	47,4	40,1	35,9	38,2	15,4	11,6
Trade balance on services, bln. dollars of the USA	- 8,4	- 6,9	- 6,0	- 7,2	- 6,6	- 7,9	- 7,2	- 6,3	- 5,4	- 4,8

 

3.1.1 Commodity export

Export of primary goods

Commodity export of the Republic of Kazakhstan following the results of 2016 constituted 36, 8 billion US dollars.

In process of fall of the prices of hydrocarbonic raw material and metals the share of primary goods in the total amount of commodity export of Kazakhstan was reduced from the maximum 76% in 2011 to 65% in 2016.

Raw export of Kazakhstan is generally provided by three enlarged commodity groups:

fuel mineral, oil and products of their distillation; bituminous substances; wax mineral - 88%;

ores, slag and ashes - 5%;

cereals - % 3,4;

the others - % 3,6.

Commodity group "Fuel mineral, oil and products of their distillation; bituminous substances; wax mineral" it is provided by 12 commodity groups at the level of 6 signs Commodity Nomenclatures of Foreign Economic Activity, the total amount of export in this direction constituted 21 bln. dollars of the USA.

Geography of raw export. In 10 years the greatest specific weight in export of the Kazakhstan products of mineral fuel, oil and products of their distillation is the share of Italy (% 25,6), China (% 11,4), the Netherlands (% 10,2) and France (% 9,4).

The commodity group "Ores, slag and ashes" is provided by 36 commodity groups and export by these types of goods in 2016 constituted 1, 2 bln. dollars of the USA.

In general, over the last 10 years ores, slags and ashes were exported on two main markets - Russia (% 55,3) and China (% 40,6).

Export of commodity group "Cereals" in 2016 constituted 0, bln. dollars of the USA. Grain constitute about 50% of export of this direction, providing to Kazakhstan the place in ten world exporters of grain. The geography of export of the Kazakhstan grain is provided by 70 countries.

In 10 years Iran (% 13,4), Azerbaijan (% 12,0), Tajikistan (% 10,9) and Uzbekistan (% 9,6) became the main importers of grain crops of Kazakhstan.

In general, on raw export Kazakhstan fully realizes the competitive advantages, at the same time the favorable market situation on traditional export basket allowed the country to provide high growth rates of economy, to increase social and economic potential, to solve number of urgent problems of economy.

Primary export goods have natural comparative advantages which facilitate access to the world markets:

short chains of value added;

low sensitivity to transportation terms;

dependence, generally from deliveries of local natural resources;

availability of scale effect of production;

rather high specific cost that reduces sensitivity to transportation expenses, in the conditions of lack of outlet to the sea and geographical remoteness of the Kazakhstan exporters from the markets.

As a result, for raw export transactional costs are reduced, need of coordination between economic agents, and also between agents and regulating authorities is minimized.

But in the nearest future it is difficult to expect the high prices of energy resources which created model of "the oil growth" of the 2000th years. Need ripened, keeping competitive advantages of Kazakhstan on primary goods, to increase the potential of exit to the global markets of non-oil products via mechanisms of the approved export strategy.

Export of the processed goods (non-oil export)

Export of the processed goods in 2016 constituted 12, 8 bln. dollars of the USA, its share constituted 35% of the total amount of commodity export.

In spite of the fact that the share of the processed goods in general structure of export shows positive dynamics, in value term export of this type of goods has steady tendency to fall.

Such trend was shown in the majority of industries which are priority in the program of industrial and innovative development.

So, export of products of ferrous metallurgy, in relation to 2012, fell in 2016 to 37,6 of %, non-ferrous metallurgy - on 30,5 of %, food - on 33,4 of %, chemicals for the industry - for 55%, railway equipment - on 39,2 of %, the equipment for the mining industry - on 23,7 of %, the equipment for the oil industry - on 12,3 of %, building materials - on % 51,1.

At the same time, if raw industries can recover rather without serious consequences the line items in the world market in case of increase in prices for raw materials, then to the non-oil sector to recover the lost export line items much more difficult.

It is connected with objective features of production of goods of processing industry which complicate export conditions:

the availability of more difficult supply chains and difficulties connected with their management;

high sensitivity to transportation expenses and terms of transportation and logistics;

dependence on efficiency rate of coordination of the market;

high dependence on the prices and access to import intermediate resources;

big dependence on the level of technologies, science intensity of production, quality and cost of labor power.

As a result, the Kazakhstan exporters which production has the extended value added chains are sensitive to transportation expenses and terms of deliveries, experience much bigger difficulties when exporting. As a rule, they are forced to be guided by the next regional markets of the CIS countries.

It is possible to explain with these difficulties that in structure of the Kazakhstan export of the processed goods over 90% make intermediate goods, mainly low repartition.

Export of the processed intermediate goods is provided by the enlarged commodity groups:

"products from ferrous metals" - 22%;

"fuel mineral and oil products" - 20%;

"products of inorganic chemistry" - 16%;

"copper and copper products" - 11%;

"precious metals" - 5%;

"zinc and products from it" - 5%;

"products of the flour-grinding and groat industry" - 4%;

"aluminum and products from it" - 3%;

the others - 14%.

Export of "ferrous metals" in 2016 constituted 2, bln. dollars of the USA. Products export volumes on this commodity group are unstable in connection with strong volatility of quotations in the goods markets. From category of ferrous metals in 10 years Kazakhstan exported 139 goods items at the level of 6 signs Commodity Nomenclatures of Foreign Economic Activity.

In structure of consumption of the Kazakhstan ferrous metals in 10 years the greatest specific weight is occupied by Russia (% 19,4), further there are Iran (% 16,0) and China (% 14,4).

Also, Kazakhstan exports large amounts to the USA (% 2,0) and other foreign countries (% 13,4).

In 2016 the export volume of goods of industry "Fuel mineral and oil products" made 1, 3 bln. dollars of the USA. In terms of money the export volume was reduced by 3 times from 2014 to 2016, and in physical expression decreased on quarter.

The processed products from industry "Fuel mineral and oil products" are provided by distillates (kerosene, gasoil, etc.), propane and butane.

The largest consumers of the Kazakhstan products of this industry in 10 years are the Netherlands (22%) and other countries of Europe, and also China (9%). China stopped to import distillates in 2016, actively increases import of propane and butane.

In 2016 export of products of "inorganic chemistry" constituted 2, bln. dollars of the USA, reducing on % 22,6 in comparison with 2015 is observed.

Decrease in the world prices led to reducing export of uranium for 23% in 2016.

Kazakhstan provides 40% of requirement of world nuclear power, mainly delivering uranium concentrate, according to long-term contracts.

In 10 years the main market on uranium is China from shares more than 50%.

In 2016 the export volume of "the processed copper and copper products" made 1, 9 bln. dollars of the USA. Steady demand for the Kazakhstan copper remains at the 0,4 level of one million tons. The main goods of commodity group are copper cathodes.

In 10 years China wins first place (% 49,9) in structure of amount of consumption of copper and copper products. The share of Russia constituted all % 4,4. Despite long transport shoulder, Kazakhstan exports copper to Great Britain (% 19,7), Turkey (% 10,8) and Italy (% 7,9).

Thus, structural tendencies of base of non-oil export show that export concentrated in industries and around several dominating products. As a result, for the last decade the assortment decreased, that is export volumes concentrated around several main products more and more.

The structure of non-oil export is characterized by also low coefficients of "survival" of new types of non-oil export.

As a result, in key industries of non-oil export Kazakhstan concentrates more and more on less difficult products which represent limited opportunities for differentiation and usually compete in the main markets in the lower part of "quality ladder".

The revealed tendencies in the field of export of the processed goods are specified importance of the solution of the collected problems regarding strengthening of coordination of actions for decrease in transactional costs of the exporter on basis:

complex use of measures and instruments of support, especially for assistance to the exporters representing small and medium business;

creations of mass effect of use of instruments of support of export to force of their systemacity and coherence;

improvements of interaction of entrepreneurs among themselves and with the state on the principles of "single window";

realization of package of measures for reducing the foreign trade barriers,

reducings time of transportation of the processed goods;

increases in efficiency of logistics services;

reducings time and cost of passing of customs procedures;

hedgings of currency risks.

Tendencies in agricultural export and food from the Republic of Kazakhstan

According to KS MNE RK in 2016 export of products of animal and plant origin, final food products reached 2150, 0 mln. dollars of the USA, having constituted 5,9 of % of all cost of export.

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